How Does Filing for Bankruptcy Affect Your Tax Status?
If you are wondering “Can I file for bankruptcy if I haven’t filed taxes?” you should keep in mind that although it is possible to file taxes after bankruptcy, it is a very complicated process. Due to this there are no clear cut answers regarding tax obligations and bankruptcy. This is because there are so many variables involved and every situation is different.
The best way to deal with your taxes during bankruptcy is to go straight to a tax advisor. A tax advisor will be able to assess your individual situation and tell you what steps you need to take. They will also be able to tell you what paperwork is required as well as how the law affects you and your taxes.
Why Do I Need to Consult a Tax Advisor When Filing for Bankruptcy?
During your bankrupty, you will need to consult a tax advisor. This is because bankruptcy law is complex and difficult for the average person to understand.
One of the reasons that bankruptcy laws are so complicated is that the law varies from state to state. A lot of what goes on in your bankruptcy proceedings will depend on the bankruptcy laws of your state.
There are so many aspects to consider when it comes to bankruptcy that the average person will not be able to comprehend it all without the help of a professional. For example if you have borrowed money in the past and the creditor has forgiven that debt, the debt will then be classified as income. This income will need to be taxed. Most people will not know what to look for or what the law requires in odd situations such as this one.
Trying to file taxes after bankruptcy without a tax advisor could lead to a number of negative consequences. Keep in mind that a bankruptcy is a legal proceeding and by omitting or giving the wrong information on your form you are committing a crime.
Can I File for Bankruptcy if I Haven’t Filed Taxes?
The short answer to the question “Can I file for bankruptcy if I haven’t filed taxes?” is yes. However it is advisable to sort your taxes out before filing for bankruptcy. Some of your tax debts may be able to be written off when you file for bankruptcy while others will not.
All federal and state taxes will be discharged if they are old enough. Income taxes may be discharged if they fulfill certain criteria. If some taxes are deemed to be non-dischagable you will still be liable for the debt.
Again it is important that you consult a tax advisor as every individual will have a different set of circumstances and unless you fully udnerstand tax and bankruptcy laws, mistakes could be made. In the case of bankruptcy mistakes in documentation could cost you considerable amounts of money and time.
Essortment, How Does Bankruptcy Affect Your Tax Filing Status?, https://www.essortment.com/bankruptcy-affect-tax-filing-status-19927.html
IRS Bankruptcy, Tax Bankruptcy, https://www.irsproblem.org/content.php/filing-bankruptcy/5